| Originated from the Anglo-American culture,peer-to-peer lending is a web-based financial tool that connects borrowers directly with investors. Because of its efficiency and user-friendliness, the popularity of these types of services exploded among investors.Partly thanks to its exponential growth, the P2P lending industry is mired in controversies and scandals. Investors suffer heavy losses because of fraudulent practices, illegal fundraising or other forms of illegal practices.The service in its current form is far from perfect. Unfair information distribution, scant investor protection is among some of the most appalling problems sprouted in recent years. The industry is poorly regulated. Investors rarely get their money back even in situation that was well-publicized.Recourses are scarce once investors'rights have been infringed upon. Whether through arbitration, litigation or negotiation, investors' ability to retrieve stolen money is extremely limited in most cases. Unlike emerging markets such as ours, P2P lending services in Britain, the US and Germany are put under tough regulation and has become an essential part of the financial industry. The whole sector benefits hugely from low bad loan ratio and high requirements of entry. The service providers also have strict rules on where and when to lend out money, and unused money is temporarily put under the consignment of third party firms. In the worst case scenario,investors should not worry because their money is guaranteed by P2P firms or collection agencies who, once they have paid investors, automatically obtain the right of recovery.This article tries to expound the basic rights of P2P investors and the circumstances in which their rights will be infringed upon. Also I will try to dissect the pros and cons of litigation, arbitration and negotiation in terms of protecting those basic rights. Then I will further elaborate on how to improve P2P investor protection mechanism in China. |
PDF Full Text Request